This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
New regulations aim to simplify the operations of funds investing in the private market and boost the inflow of private capital. The Qualified Investment Fund (KFI) project, together with the planned opening of PPK and OFE to a new type of investment, could reshape the innovation financing landscape in Poland. But will they solve all the challenges?
Innovation development in Poland still relies heavily on public support. Capital is essential for the growth of technology companies - not only through equity investments but also via a stable legal and regulatory framework. Yet systemic gaps remain.
“PFR Ventures has been fueling the domestic venture capital sector for years. But money alone is not enough to drive innovation. Startups and VC funds need to operate in a legislative and tax environment that is friendly and adapted to their specific needs,” says Aleksander Mokrzycki, Vice President of PFR Ventures.
The Ministry of Finance is drafting a bill to amend certain laws in connection with the development of investment funds. PFR Ventures has consulted on a significant portion of the proposed changes. Legislative work is still ongoing (so the article presents only a general outline).
“To streamline the process of financing innovation in Poland, changes are needed across several laws. This includes the Investment Funds Act, the Alternative Investment Fund Managers Act, and the legislation governing pension funds and Employee Capital Plans (PPK). In an ideal scenario, their implementation would be synchronized; in practice, however, this may prove challenging,” notes Aleksander Mokrzycki.
A new tool for the market: The Qualified Investment Fund
Among the proposed changes is the introduction of a new type of investment vehicle: the Qualified Investment Fund (KFI), which can be accessed by private equity (PE) and venture capital (VC) funds.
“Moreover, the private market has long advocated for allowing long-term PPK and OFE funds to be allocated to such vehicles. Managers of Polish pension assets should also be able to invest in private market funds. This is standard practice in developed Western markets. Currently, in Poland, PE and VC funds are primarily fueled by private investors’ capital, supplemented by public funds,” explains Aleksander Mokrzycki.
He emphasizes that government support has been a crucial factor in the development of PE/VC sectors worldwide. However, both the United States and Western European countries went through this transformation years ago – a stage Poland is now planning to enter.
In the West, private capital is already the backbone of the PE/VC market, with institutional funds serving only as a complement. In Poland, there is simply less private capital available. As the economy grows, this level should gradually increase.
“We need to catch up,” notes Aleksander Mokrzycki.
Larger funds register abroad, e.g. in Luxembourg
What will the new legal vehicle – the Qualified Investment Fund (KFI) – change?
Aleksander Mokrzycki points out that today, almost all large PE/VC funds founded by Poles are registered abroad, primarily in Luxembourg. Their management teams opted for a legal and tax framework most favorable to them. The problem, however, lies in the high costs of maintaining vehicles in Luxembourg. For a venture to be viable, the fund must have capitalization above EUR 100 million.
“Smaller funds operating in Poland function under commercial company law. They typically use a limited joint-stock partnership (SKA) structure and may additionally obtain the status of an Alternative Investment Company (ASI). Complications arise at the tax level – for instance, due to double taxation – and in the flow of capital during investment transactions. Companies under commercial law rely on fixed capital, which is inconsistent with the operational model of investment funds. For example, if a fund wants to return capital to investors, it must go through a months-long capital reduction process… In Poland, formalization can take over a year. Another scenario: a fund adds a new startup to its portfolio. Investors transfer capital during the first issuance, but some want to participate in a second issuance two or three months later… Yet the first issuance may not yet be registered in court. Luxembourg fund structures, by contrast, are based on variable capital, allowing money to be invested and withdrawn practically overnight,” explains Mokrzycki.
He notes that the proposed changes envisage the possibility of converting an SKA structure into a KFI. This should resolve a significant portion of the challenges currently faced by funds operating under the SKA model.
Investor's perspective
The market awaits a stable legal environment
Luxembourg, which heavily inspires the legislators, built its position over many years to become the second-largest jurisdiction globally by assets under management.
Drawing on Luxembourg’s experience is justified. Already, experienced Polish PE and VC management teams use that jurisdiction to register funds. Of course, it is important to distinguish between the fund’s registration location and the geographic area in which it operates. For example, Balnord has a legal structure in Luxembourg but invests across the Baltic Sea region, including Poland.
For management teams, choosing an overseas structure remains a necessity for investor security. If the proposed changes prove durable, they will certainly help attract capital to Poland – a goal we should pursue.
What the Qualified Investment Fund will offer
The Qualified Investment Fund (KFI) will fall under the Investment Funds Act rather than the regulations of the Commercial Companies Code. The vehicle is being designed as an entity based on declared capital, contributions to the fund called by the manager, and a defined mechanism for capital distributions.
“We are working to ensure that the KFI structure itself is fully exempt from taxation. This does not mean taxes will disappear – income should be taxed once, at the investor level. Our goal is to introduce standards in Poland that are aligned with European norms. At the same time, due to its low operating costs, the KFI will offer a viable alternative to Luxembourg structures,” says Aleksander Mokrzycki.
He adds that the introduction of KFIs could facilitate the investment of PPK and pension fund capital in the private market. Formally, however, this involves two separate legislative initiatives.
Foreign investors expect familiar structures
The lack of legal structures similar to those in Luxembourg poses a challenge for many funds.
“Current structures available in the Polish market, as defined under the Investment Funds Act, are not fully adapted to the specific needs of private market funds for several reasons. These include tax transparency, capital flexibility, and investor protection mechanisms. The Qualified Investment Fund, recommended to the Ministry of Finance by PFR Ventures and the market, is precisely the response to the absence in Polish regulations of structures suitable for small and emerging investment funds,” confirms Anna Wnuk, Managing Director of the Polish Private Equity and Venture Capital Association (PSIK).
She also points out that Luxembourg structures are costly for small Polish funds – effectively unviable for entities with capitalization of EUR 20–50 million, a segment that is increasingly growing in Poland. Currently, such funds mostly operate as Alternative Investment Companies (ASI). Large funds, with capitalization above EUR 100 million and institutional investors – such as the European Bank for Reconstruction and Development – tend to choose structures in Luxembourg or the Netherlands that suit their needs. In general, foreign investors allocating capital to Polish funds require operational structures that are familiar, well-understood, and reliable for ongoing investment management.
“In Luxembourg, there are many transparent structures available for investment fund operations. The choice is broad and depends on the policy and business strategy of each entity. In Poland, the system’s reorganization is just beginning, but it is absolutely necessary for the further development of the market,” notes Anna Wnuk.
Investor's perspective
Areas where change is essential
If Poland wants larger VC funds to register locally, it must start by removing barriers. Today, these barriers are simply unacceptable to international investors – limited partners (LPs). And I see several of them.
Investor privacy. In structures such as SKA, the list of investors can effectively become public due to concentration rules and disclosures to the Office of Competition and Consumer Protection (UOKiK). This conflicts with a fundamental principle of private equity and venture capital: the anonymity of limited partners. For many institutional and private investors, this is an absolute condition for entering a fund.
Formality. Private investors should not be forced to visit a notary, obtain an apostille, or physically sign documents merely to join a fund. The global standard is contracts signed electronically via platforms such as DocuSign. During the life of the fund, an LP’s only real obligation should be responding to capital calls – without additional paperwork or formalities.
Language. The entire fund formation and operation process should be possible in English. There should be no requirement for sworn translations or submitting documents in Polish. If we want to attract international capital, we must operate in its natural language.
Taxes. The removal of unmarketable rules – such as the requirement to hold at least 5% in portfolio companies, which discourages Polish funds from co-investing – is essential. Entering at a lower percentage triggers additional taxation on exits.
These are the minimal conditions to even begin thinking about repatriating funds from jurisdictions such as the Netherlands or Luxembourg to a Polish entity. But this is only the beginning.
Jurisdiction choice also depends on trust in the legal system, regulatory predictability, and a developed service ecosystem: fund administrators, specialized law firms, and experienced auditors. Luxembourg and the Netherlands have succeeded not just because of their laws, but because of the entire institutional environment.
Poland will not become the next Luxembourg
Will the KFI lead to a return of Polish-run funds to the country?
“I do not expect a wave of returns immediately after KFIs are introduced into the legal framework. Remember that beyond legal form and tax considerations, other elements of the ecosystem matter – for example, the judiciary. In Luxembourg, courts can resolve disputes related to investment fund operations in as little as six months. In Poland, there are no specialized courts in this area, and we all know the process takes longer. We therefore expect that KFIs will initially be used by smaller, domestic investment vehicles. Whether larger funds adopt this legal form in the future will depend on the individual business decisions of management teams. The option will, however, remain open to them,” notes Aleksander Mokrzycki.
Anna Wnuk shares a similar perspective: building a comprehensive support infrastructure will take many years and a well-developed ecosystem.
“KFIs are just one element of a broader package of legislative proposals currently being designed for the capital market. The most important step is adapting the investment policies of pension funds to allow OFE and PPK capital to flow into private market funds. That will be the real breakthrough,” emphasizes Anna Wnuk.
KFI will fill the gap as a bridge solution
Dariusz Landsberg, Managing Director of Genprox and Fundequate, notes that the market for Alternative Investment Funds (AIFs) in Poland is currently fragmented.
“On one hand, we have the rigid closed-end fund system, which offers prestige but generates operational costs exceeding PLN 300,000 per year and is tightly regulated by the Polish Financial Supervision Authority (KNF). As a result, this market has been stagnant for many years. On the other hand, the ASI model, though cheaper, forces managers to contend with the bureaucracy of the Commercial Companies Code – from lengthy registration procedures with the National Court Register (KRS) to accounting rules that are ill-suited to investment activity. After an initial period of strong growth – driven by exemptions from capital gains tax and programs from PFR Ventures and the National Centre for Research and Development – I now see stagnation. The introduction of family foundations, which are more attractive for organizing the wealth of the richest, has further reinforced this trend,” explains Mr. Landsberg.
KFIs enter this gap as a bridge solution, bringing to the Polish legal framework standards familiar from developed Western markets.
“The key is the declared capital model – capital calls. This is a revolution in efficiency. Managers no longer need to keep ‘dead cash’ in the fund’s account; instead, they call on investors to contribute only when a specific investment opportunity is identified. This directly translates into higher internal rates of return (IRR) and significantly reduces bureaucracy for both investors and managers. It aligns Polish PE/VC funds with global market standards. Such a solution opens the Polish market to foreign investors,” emphasizes Mr. Landsberg.
He adds that the KFI design emphasizes “skin in the game.” The statutory requirement for managers to commit their own capital, combined with a fixed waterfall mechanism – where performance fees are paid only after returning capital to investors – builds a foundation of trust that has been lacking until now.
“Of course, the success of KFIs is not guaranteed. While the new form offers higher transparency and operational efficiency, for many smaller ASIs, higher regulatory requirements and costs could be a barrier. The key catalyst for change will be the stance of institutions such as PFR Ventures. If the country’s largest investor begins to require portfolio funds to adopt KFI structures, the market will naturally professionalize,” Mr. Landsberg concludes.
Expert's perspective
The success of KFIs remains uncertain
Simply “repackaging” the regulations into a new box labeled KFI will not solve the problem of insufficient private capital or high entry barriers. If KFIs turn out to be just another, more expensive structure with additional requirements, they may share the fate of their predecessors. Without a real inflow of capital from pension programs, institutional investors, or foreign sources, KFIs will remain a legislative curiosity. Rather than a genuine reform, we may see another demonstration that the problem in Poland’s fund system is not a lack of statutory provisions, but a lack of trust and liquidity – things no new legislative project can create on its own.
Following the principle that stirring alone does not make the soup tastier, the real “game changer” may be opening the door for PPK and OFE capital. Clarifying regulations in this area could allow billions of zlotys from Polish retirement savings to flow, at last, into innovative enterprises through professional private market funds.
This is an opportunity to make Poland’s VC/PE ecosystem less dependent on public funds and to build a mature, private capital market. At the same time, such a solution significantly expands the investment options for pension programs. Despite the appeal of the Warsaw Stock Exchange and record returns from local indices, it remains a market with limited supply of innovative, high-quality companies; in recent years, more firms have been delisted than newly listed.
Key Takeaways
- Poland’s venture capital and private equity market still relies heavily on public funds, although it should ultimately be driven primarily by private capital. Industry representatives emphasize that beyond financing, stable and predictable regulations tailored to the specific needs of innovation-focused funds are essential. Legislative work is underway on several laws, including those governing investment funds, OFE, and PPK. Of particular significance could be allowing pension funds to invest in private market funds – a move that some experts believe could substantially strengthen the market.
- The proposed Qualified Investment Fund (KFI) aims to simplify fund operations and align Polish regulations with Western standards. The new vehicle is based on declared capital and capital calls, facilitating both investments and distributions. This solution may also offer a lower-cost alternative to registering funds abroad, for example in Luxembourg or the Netherlands.
- Regulatory changes alone are not enough. A country’s attractiveness for funds also depends on efficient courts, legal stability, investor privacy protections, and a developed advisory services ecosystem. Without a significant inflow of private capital – including from pension funds – the new legal form may not break the market’s stagnation. The sector’s future will ultimately depend on broader reforms and investors’ trust in Poland’s system.